Getting Caught up in Pyramid Schemes

Have you ever been contacted by someone (often a friend or colleague) who has canvased an amazing business opportunity to you, and all you have to do is go to a free seminar to find out more information? Normally they will tell you about how it’s a great way to make money, and it doesn’t even involve all that much time or effort.

If you have, then chances are that you will know the majority of what I am going to talk about in this post. If not, then I will simply say – be skeptical of things that sound too good to be true.

So the other day I had a consultant visit me at work. I have worked with her on a number of occasions and I know her to be a professional in all aspects of my dealings with her. However this one day when she visited me, she seemed a bit on edge, like something wasn’t quite right.

I queried her on what the problem might be and she told me that Mike (not his real name) who was sitting across the courtyard from us, had recently propositioned her regarding an amazing business opportunity. I immediately knew what the problem was after that, as Mike had also previously propositioned both me and my wife regarding this same business opportunity. The amazing opportunity turned out to be Amway (or one of the many spin offs) where you essentially have to sell products to your friends to earn a teeny tiny commission for the sale.

Unfortunately for Mike, I had already had quite a large exposure to the pyramid scheme that he was selling, as one of my good friends had already been swept into this particular pyramid scheme by one of his smooth talking friends. When he signed up he had tried to garner my interest by convincing me on how simple it was going to be to become rich.

He told me about the different levels you could attain within the system and the larger and larger commissions you could achieve as you moved up through the system. The entire system is based on getting as many people as possible to sell products on your behalf so that they earn a commission, and you earn a commission on their commission.

I created this picture of a typical pyramid scheme to demonstrate the principal of how it works.

Essentially the people who are at the bottom of the pyramid get almost no money, while the people at the top make a small fortune as they have lots and lots of people earning a commission for them without having to do anything. Unfortunately most people who get to the top, do so by screwing all of their friends over, or by conning lots of people into selling on their behalf.

My friend tried to make it work for close to 2 years. Throughout those 2 years he tried to sell me (and lots of others) all manner of items. It stopped being as fun hanging out with this person because it felt like every time I saw him he was trying to sell me something. After a while I just told him outright that I wasn’t interested in the products and to not bother asking me.

I suspect many people like my friend who have entered into this type of selling arrangement have lost a lot of friends because of it. It can very quickly sour a relationship if you are always being harassed into buying something.

Anyway – back to Mick. Not only has he been trying to make a living out of this pyramid scheme thing for as long as I have known him (6-7 years), but he is now getting to the point of risking his actual employment, by soliciting people to join his private business whilst at his main workplace – not smart in my opinion. On top of this, the woman who had visited me now wanted nothing to do with him and was cautious about being left alone with him.

So have you ever been caught up in something like this? Did you make money?

I know a few people who are involved in some type of pyramid scheme and are always trying to get me to join them… thanks but no thanks. I don’t want to be a pest in people’s lives just so I can make a little bit of money.Aldo @ Million Dollar Ninja recently posted..How I Saved $450+ On Getting My Car Painted

To be honest, I believe pyramid schemes like this could work, given the good product, right timing, and few competitions, but if not, you’ll be better off finding other ways to make money. I did join a pyramid scheme a while ago for a couple of months and I was surprised to see that actually a lot of people were involved in it. Nevertheless, from the beginning I just didn’t trust the products I was selling, and I didn’t feel like to look like I was excited about them, so I decided to quit.Suburban Finance recently posted..What Are My Options If I’m In Debt And Need to Pay it Off?

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